Described as a "crisis" by one city councillor, the motion did not receive the required votes to move to the top of the agenda.
A report on the homeless bed situation is scheduled to come to the floor in April, but Coun. Adam Vaughan said the issue needs to be taken up right now.
Vaughan said he's getting a clear "indication ...that this is a crisis, people are in harm's way and the city is failing to take care of them."
After the motion was defeated protesters — mostly members of the Ontario Coalition Against Poverty — hurled insults at councillors before leaving the chamber.
City staff maintain there is no crisis.
On Tuesday night, for example, there were 3,836 beds available in Toronto's shelters.
Of those beds 3,669 were used. Leaving 167 empty beds or a 4 per cent vacancy.
Mayor Ford and others maintain that resources are adequate.
"We have enough shelter beds," said Ford. "A lot of these people don't want to use these beds, that's their prerogative. We have more than enough shelter beds, more than enough money for the homeless."
But the homeless and their advocates say the numbers don't tell the whole story. Violence and other problems inside the shelters are caused by overcrowding, they say.
OCAP says it is not about to throw in the towel.
John Clarke, OCAP leader, said Wednesday if the motion is rejected "we are not going to let people be abandoned."
They'll mount a protest at Metro Hall on March 7.
"We will ask people from churches — all decent minded people — to come with us, with homeless people to Metro Hall and open it up as a shelter."